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Saturday, 27 July 2013

Emergency Procurement and Procedures as a Purchasing Policy (Part 2)

Previously we discussed the term
emergency procurement and the methods for acquiring goods and services during
this process. The key aspect now is to understand how to plan individual
emergency procurement. Whether man-made or natural, preplanning can always
minimize the risk factors involved in an emergency procurement. There are some
pre and post emergency methods which may help the procurement department
respond to situations proficiently.

Contingency
Plan: The overall contingency plan should meet objectives during emergency
situations to minimize the risk factor and keep the interest and benefit of
organization intact. Similarly, it is obviously practicable to have a
contingency plan prepared by your supply source and maintain a mechanism to
periodically check the status of their inventory to ensure uninterrupted supply
in an emergency situation. A web-based collaboration tool can provide immediate
real-time access to supply side and establish effective communication with the
sources, thus bringing a win-win situation for both the organizations.

“As and
when” call: An effective procurement planning would surely help eradicate
the need of emergency procurement. Blanket Purchase Agreements would not only
reduce the risk factor during emergency requirement but would surely help
organizations in maintaining the cost constantly incurred for products /
services in question. The effective contract management tools can surely help
reduce procurement lead time and achieve cost efficiency and effective
procurement during an emergency procurement need.

Maintain
appropriate inventory levels: It is for sure that not even in a calamity
but a normal operation may be effected if the inventory level is not checked
and maintained. First come first out is also a key driver in maintaining
effective inventory. It is established that an efficient Inventory Management
tool can help organizations reduce operational costs while improving service
delivery quality and increasing customer satisfaction. With a well-built
structure in place, one can be free of surprises or extraneous expectations at
the end of the season.

Effective
vendor relationship: The buyers with adversarial relationships with their
vendors will struggle, so this is the right time to maintain an effective
vendor relationship for future emergency procurement needs. A balanced and well
implemented supplier relationship management framework helps organizations to
identify and manage buyer’s obligations to the supplier which ultimately
results into achievement of operational interests of both the organizations
(buyer & supplier).

Have
multiple sources in hand: It is ideal to have relationships with multiple
sources for immediate identification of an alternative source when established
source fails to deliver commitment. This approach can help reduce the supply
risks for all types of procurement categories such as routine items, leverage
items, strategic and bottleneck.

Empower
your resources: Although a purchase policy provides certain flexibilities
during an emergency purchases to forgo policies; however it is still advisable
to equip your purchase personnel with necessary techniques and procedures to be
followed to handle such situations. A procurement professional should be
trained enough to make a reasonable and justifiable decision in such
circumstances where certain steps may be waived except the tender evaluation
and approvals. The emergency situations do not relieve an organization from
negotiating a fair price and documentation during such circumstances.

Market
Intelligence: It is of course a purchaser’s prime job responsibility to
keep a market insight for economical and reliable sources and they should be
continuously locating and evaluating to develop a reliable source as a
contingency plan. The action plan may vary in case of emergency purchasing of
strategic and bottleneck items. As the purchases of these items may not be
possible in case of emergency procurement, however a well-informed purchaser
can use the market intelligence tools to exploit the situation and to make the
most of his high buying power to secure good prices, even from a single source
of supply.

Though there are many ways to
respond during emergency procurement or pre-plan unforeseen incidents as well.
To mitigate the risk however, a well-established procurement policy and a
knowledgeable procurement resource can surely contribute to eradicate risk
factors and help the organization to flourish.

1 comment:

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